Developers, previous owners of contaminated sites and local authorities should all note the Secretary of State's decision in the Willenhall Gas Works contaminated land remediation notice appeal.
Contaminated land remediation notices are rare: most of the UK's legacy contaminated land is addressed on a voluntary basis, most often as part of redevelopment. Nevertheless, the regulatory regime for addressing contaminated land, contained in Part IIA of the Environmental Protection Act 1990, has teeth, and the costs of remediation for historic issues can be significant (we have experience acting in a number of cases with estimated clean-up costs in the millions of pounds, in some cases for sites sold by clients many years ago). Given the stakes, there are strong incentives for the recipient of such notices to appeal.
A recent decision by the Secretary of State for Environment, Food and Rural Affairs following such an appeal provides some guidance on the operation of the contaminated land regime. It is particularly noteworthy because it is only the second determination by the Secretary of State in the seventeen years since the contaminated land regime came into force.
In her decision, the Secretary of State accepted the recommendations of the inspector following a public inquiry and quashed a remediation notice served by Walsall Metropolitan Borough Council ("Walsall") on developer "Jim 2". Jim 2 had redeveloped the site of an old gas works in the 1970s to build a housing development. In 2007, Walsall investigated the site and found part of it to be "contaminated land" because of the presence of known carcinogen benzo(a)pyrene. It served a remediation notice on Jim 2 ordering them to pay the costs of the remediation works.
There are lessons to be learned from the outcome of this appeal, for local authorities, for current and previous owners of contaminated sites, and for developers.
Local Authorities: have you done enough to prove that the land is contaminated?
Great care should be taken by authorities in determining that land is, in fact, 'contaminated land' within the strict definitions of the regime. There is detailed statutory guidance on determining whether land is contaminated and it must be followed carefully. The Secretary of State in this case determined that there were shortcomings in the site investigations carried out by Walsall's consultants and that it was incumbent upon Walsall to identify and address any shortcomings. It was for Walsall to satisfy the tests, and it had not. It was also for Walsall to explain why it concluded that there was a significant possibility of significant harm: although local authorities have significant discretion here, its conclusions must nevertheless have an evidential basis.
Developers: there is a risk from introducing pathways and receptors
Developers are unlikely to 'cause' the presence of a contaminant but a knowledge of its presence and a failure to address it as part of redevelopment may well bring the developer into the liability group through the 'knowingly permitting' limb.
Further, the act of redeveloping for housing, and exposing new homeowners to existing contaminants, introduces pathways and receptors that can make developers liable at the exclusion of the original polluter.
This is true even if the standards of remediation for redevelopment were perfectly appropriate at the time of redevelopment: it is no defence to argue that land quality standards have become more robust in the decades since the original development. Developers today with a long history of development might want to take note.
Previous owners of contaminated sites: a reason to be optimistic?
The decision was favourable to the original polluters, excluding them from liability on the grounds that it was the developer who had subsequently introduced the pathway. This will no doubt cheer businesses who might have sold real estate assets with known contamination many years ago. However, a word of caution: the original polluters here were only excluded from liability because the developer was still in existence. Had it disappeared in the intervening decades, the case would have been very different. Current owners of contaminated sites need to understand these risks and reflect them in their divestment strategies.